Sri Lanka takes every possible measure in paying back multilateral loans obtained via WB, ADB and bilateral partners Cabinet Co-Spokesman and Minister Bandula Gunawardena disclosed yesterday.
Treasury Secretary Mahinda Siriwardane has briefed the Cabinet of Ministers on dried up Government coffers, and calls for prudent financial management.
The Cabinet of Ministers at its meeting on Monday approved the service of US $ 2.6 billion debt payments due in the first half of this year, whilst vesting the authorisation powers to the Treasury Secretary to provide the necessary funds.
“Sri Lanka will continue to pay back multilateral loans obtained from institutions like the World Bank and Asian Development Bank as well as the bilateral partners,” Minister Bandula Gunawardena said at the post-Cabinet meeting media briefing yesterday.
A total of $ 2.6 billion, just over $ 2 billion is for loan repayments whilst $ 540 million is for interest payments. There are also $ 709 million in dollar-denominated Sri Lanka Development Bonds (SDB) to be paid with $ 46 million as interest payments.
The total amount payable in the first half of 2023 is just under $ 300 million from what Sri Lanka is expecting from the International Monetary Fund (IMF) via an Extended Fund Facility (EFF) of $ 2.9 billion within the first quarter of the year.
“Every Government has been doing this,” Gunawardena said, adding that the Parliament has approved financing the Budget 2023 with loans amounting to almost Rs. 5 trillion via financial tools such as SDBs, treasury bills and treasury bonds.
He also said that these debt repayments will be done within the borrowing limits set in the Budget for 2023.
“During Mahinda Rajapaksa regime for the 10 years from 2004 to 2014 the total SDBs issued was $ 6.5 billion, but during the four years of 2015 to 2019, the Yahapalana Government issued bonds worth $ 12.05 billion sovereign bonds.
Of the over $ 12 billion, around $ 4 billion worth SDBs in 2019 will be maturing within the five to 10 years till 2029,” he added.
On 12 April 2022, Sri Lanka announced a temporary suspension of repayment of all external debts till the ‘orderly and consensual’ restructuring of external liability obligations will be buttressed by an economic assistance program supported by the IMF.
Minister Gunawardena said Treasury Secretary Mahinda Siriwardena who was present at the Cabinet of Ministers meeting on Monday briefed on the extremely challenging circumstances in managing its cash flow and urged for prudent financial management.
“With the expected tax adjustments, the Government is expecting a total income of Rs. 173 billion, but for the essential recurrent expenditure alone it requires Rs. 196 billion, resulting in a deficit of Rs. 23 billion.
The Government must find the cash without printing new bills. This is how bad the situation is,” Cabinet Co-Spokesman explained.